I don’t like Mondays
Sept 23, 2019
–Flash eurozone Mfg PMI fell to an 83 month low of 45.6 from 47.0 in August (Mktwatch). S Korea exports for the first 21 days of September are down 21.8%. EUR is making a run for new lows, now 1.0971. US rates are lower this morning.with TYZ currently 130-06.
–Reports indicate that damage to Saudi oil processing will take longer to repair than first anticipated. Deterioration with Iran appears to have edged out China/US trade with respect to the news cycle, but the Chinese delegation’s cancellation of an agricultural trip to Montana on Friday was taken as a negative sign for talks and caused a weak close in SPX.
–The short end has responded positively to the NY Fed’s announcement of term repos over quarter end. This week treasury auctions 2, 5 and 7 year notes which will settle on Sept 30. Now it’s about the interplay between rate cuts and a new round of QE, and it’s also about potential QE and its impact on risk assets.
–Rosengren on Friday cited WeWork as a risk to financial stability, in that a run on commercial real estate could be accentuated. Not to worry, the soon to be deposed CEO Adam Neumann said that WeWork is recession-proof. I guess we’ll see how that plays out.
–The peak on the euro$ curve is now the eighth quarterly contract, EDU21, at 9856.5. On Sept 4, the high settlements for this cycle occurred at a price of 9894.5 (EDM21 and EDU21). I anticipate an eventual re-visit of those levels, but I think the peak part of the curve may move forward slightly to the 6th and 7th contract slots.
